MedPAC: Are new drugs worth higher prices?

Here's a hint at how drug prices might suffer even in advance of actual comparative effectiveness research. Call it 'no better until proven better' or 'no costlier unless proven worth it.' The Medicare Payment Advisory Commission is suggesting that reimbursement for new drugs should be set at the same rate as older meds unless drugmakers have evidence proving that the new meds are more effective than the old ones.

Then there's the even more wide-ranging suggestion that Medicare payments to drugmakers should be tied to actual improvements in patient health. Both are part of MedPAC's new report on changing Medicare incentives to reward value. That treatise was released after President Obama announced big cuts to Medicare--a total of $500 billion to $600 billion over 10 years--to help fund healthcare reform.

During Obama's weekly radio address, he suggested giving MedPAC more say in controlling the program's costs. His current Medicare cuts also include reduced rebates to drugmakers. There's no way to know how these proposals will play out, but it appears that MedPAC could be gaining clout in D.C. Its proposals are worth watching and should be taken seriously.

- read the Bloomberg story